February 1, 2017

After expanding Medicaid, New Mexico deals with uncertainty

Despite uncertainty about future federal Medicaid funds, more and more low-income New Mexicans are expected to receive health care under the government insurance program, Health and Human Services Cabinet Secretary Brent Earnest told state lawmakers Wednesday.

By the end of the current fiscal year on June 30, Medicaid is expected to cover about 44 percent of the state’s population, or 922,000 residents, including 388,000 enrolled children.

The program is now the second largest item in the state general fund after public education and will need some $940 million of state money in the next fiscal year to go along with the federal matching funds that pay most of the cost.

Medicaid’s growth comes as New Mexico, which has high poverty rates, struggles to recover from an economic recession that continues to hamper government revenues.

But Earnest said cost cutting such as reduced reimbursements to providers as well as taking a larger share of health-care money from county governments should sustain any cost increases in the coming year without bringing in revenue from other sources such as a tax on hospital services.

“Like everybody else, we are watching closely, trying to protect Medicaid,” Earnest said. “There is a lot of uncertainty.”

Medicaid’s impact on the state’s health-care sector is sizable. With the federal match, the program in the coming fiscal year would spend $5.7 billion in New Mexico.

Medicaid was one of the health programs expanded under the Affordable Care Act, also known as Obamacare. Martinez was among governors who decided to accept federal dollars to expand the program to low-income working adults. That effort has added 240,000 people to Medicaid, with the federal government now paying 95 percent of the premium costs.

That federal share will decrease to 90 percent in a few years, but the real fear is that the entire expansion effort could be severely curtailed or cutback, meaning all those residents would lose their insurance.

The Martinez administration proposes changes that would take tax revenue that county governments now use to pay for indigent health care and add it to the Medicaid budget. That and other changes would bring in $26 million to Medicaid starting July 1.

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Earnest said the shift of county funds makes sense because as more people use Medicaid there is less need for counties to pay bills for indigent care at clinics and hospitals.

“Medicaid is picking up more eligible residents so they don’t have to go to the county indigent fund,” he told lawmakers.

Lawmakers, however, challenged that, saying county indigent funds, which are generated by a voter-approved gross receipts tax, increasingly pay for the care of jail inmates and substance-abuse treatment programs, as well as covering patients who aren’t on Medicaid due to income factors or other reasons.

“We’re taking from Peter to pay Paul,” said Sen. Nancy Rodriguez, D-Santa Fe, a former county commissioner. “There are indigent people in every county.”

Lawmakers also wondered why the administration isn’t supporting an effort by the New Mexico Hospital Association to impose a broader gross receipts tax on health-care services that could support Medicaid for years to come. One proposal would impose a 1 percent gross receipts tax on all hospital services, with both for-profit and non-profit hospitals coming under the fee, and the revenue dedicated to Medicaid.

Republican Sen. Steven P. Neville of Aztec said the hospital association presented the plan to lawmakers in December, but it has yet to be endorsed by the governor.

“The hospitals approached us sometime before Christmas. Has three been any progress?” Neville asked Earnest.

Earnest said many states do have a health-care tax or a provider fee to support the expansion of Medicaid, but he has not seen a bill and does not know whether it would be endorsed by the administration.

“It depends on what the bill would look like,” he said.

The director of the state hospital association did not return a telephone message Wednesday seeking comment on whether the effort was still alive, and the governor’s office did not respond to an inquiry about her position.

Meanwhile, a new analysis on job losses connected to plans by Republican leaders in Washington, D.C., to repeal the Affordable Care Act has been released by the Economic Policy Institute.

It concludes that the job losses and other impacts of repeal “would have a disproportionally negative effect on states with the highest share of low and middle-income families and those states that took up the ACA Medicaid expansion.”

If Congress moved ahead with repeal before an alternative is in place, New Mexico would lose 31,000 jobs and see employment contract by 3.9 percent, the largest percentage employment loss in the United States.

Other states that would also see large employment losses would be Kentucky at 2.9 percent, Montana and Oregon at 2.3 percent and West Virginia at 2 percent.

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